Genome-wide association studies (GWAS) identified multiple susceptible loci for prostate cancer (PC), and recent GWAS implicated that a common variant rs1512268 on chromosome 8p21 is associated with PC susceptibility, which is located at 14 kb downstream of a prostate tumor suppressor gene NKX3.1. To clarify a susceptibility gene and functional variants in this locus, we performed re-sequencing and fine mapping of this region and identified 12 candidates of functional single nucleotide polymorphisms that were absolutely linked with each other. Screening of these variants by RNA stability assay, electrophoretic mobility shift assay (EMSA) and reporter assay indicated that rs11781886 in the 5′-UTR of NKX3.1 displayed different binding affinity to nuclear proteins between the alleles, and that the transcriptional activity of the NKX3.1 promoter was significantly lower in the susceptible allele of this variant. Sp1 was determined to be the transcription factor that binds to the susceptible G allele, but not to the non-susceptible A allele. Allele-specific transcript quantification (ASTQ) and quantitative PCR analyses showed that the expression of NKX3.1 in the prostate was significantly lower in the subjects with the haplotype carrying the susceptible allele. These results suggest that the functional variant rs11781886 in the 5′-UTR of NKX3.1 can affect its transcription by altering the binding affinity of a transcriptional factor Sp1, and might result in PC susceptibility by lowering expression of NKX3.1 in the prostate.